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As Americans grow poorer, more rely on Medicare, Medicaid

More people relied on state and federal health insurance programs as employer-based plans became more expensive and as US unemployment levels remained high, according to the US Census Bureau's annual report on income, poverty, and health insurance coverage.

About 1.5 million fewer Americans had health insurance plans covered by their employers in 2010 than in 2009 – while 1.8 million more joined government insurance plans.

The number of people covered by Medicaid, the government program for the poor, increased 1.5 percent to 48.6 million. Those covered by Medicare, the government program for the elderly, rose 2.1 percent to 44.3 million.

Already, Republican presidential candidates are attacking President Obama's new health-care law for growing the size of the federal government. So what do these numbers say about his health-care reform?

Some say the report demonstrates a weakness in the Obama health-care law – and is a clear admonition for voters.

“As federal lawmakers and the Obama administration grapple with significant budget cuts, the increase in the number of Americans who lack job-based health insurance very well could put more strain on federally funded programs like Medicare and Medicaid,” says John Egan, managing editor of InsuranceQuotes.com. “In other words, taxpayers could end up footing a bigger chunk of the health-care bill for Americans who do not have employer-sponsored health insurance.”

Passed by a Democratic-controlled Congress and signed into law last year, the Affordable Health Care Act was designed to expand insurance coverage to some 32 million uninsured by the time it goes into full effect in 2014.

Tuesday's Census report showed that almost 50 million Americans are uninsured, or 1 million more than in 2009. It also showed that there were 46.2 million people living in poverty in 2010, up from 43.6 million in 2009 ─ the third consecutive annual increase and the largest number in the 52 years for which poverty estimates have been published. That represents 15.1 percent of people in the US.

The growing ranks of poor Americans demonstrate the need for federal safety-net programs, argues Ron Pollack, founding executive director of Families USA, a national organization for health care consumers. “This, to me, tells Washington it’s very important to protect Medicaid, because to do otherwise would fray the lifeline that people who have lost employer-sponsored healthcare need to stay insured.”

Only a few provisions of the 2010 healthcare reform law have gone into effect so far, so it may be too early to declare the law a failure or a success, some analysts say.

Moreover, the Census report may overstate the number of uninsured, says Devon Herrick, from the National Center for Policy Analysis in Dallas. He cautions that the Census numbers overrely on self-reporting by those whose circumstances may be very different from the prior 12 months.

“Most experts agree the Census Bureau is not actually measuring the uninsured for the full year. Rather, people on surveys tend to answer the Census Bureau question based on whether they have coverage at that point in time.”

The report shows that a clear and worrisome trend was afoot even before the world economic downturn hit in 2007. The number Americans lacking health insurance rose from 13.7 percent to 16.7 percent from 2000 to 2009.

“The implications of this, for me, is that it wasn’t the policy of any one time that created this problem of health-insurance affordability, and therefore to blame or applaud the current administration is way too simplistic,” says Kaveh Safavi, a health industry analyst for Accenture, a global management consulting firm. “This is not a political issue but rather a fundamental economic national issue that needs to be discussed that way.”